June 29, 2011
OCC Issues Guidance on Prepaid Access
WASHINGTON — The Office of the Comptroller of the Currency issued guidance on prepaid access programs to national banks today.
Prepaid access products are the fastest growing area within the payments sector. The products are increasingly being marketed to and used by consumers as an alternative or supplement to traditional bank accounts. It is important for consumers to fully understand these products and their associated costs. National banks that offer consumers access to prepaid funds are exposed to a variety of risks, including potential fraud and money laundering, due to the complexity associated with the design, delivery, and increased functionality of prepaid access products. When such products or any components supporting them are outsourced to a third-party service provider, the risks are often more challenging to manage. The bulletin provides guidance to banks to ensure they develop and implement a comprehensive risk management program that reflects the nature and complexity of prepaid access products.
Prepaid access refers to a wide range of devices that facilitate consumers’ access to money electronically, including general purpose reloadable cards, payroll cards, government benefit cards, retail gift cards, mobile phones, and Internet sites. The consumer is able to add and store funds on the device and use it to spend or withdraw the funds from a variety of sources.
An effective prepaid access program begins with a thorough assessment of how the product fits within the bank’s overall business strategy and risk appetite. The program should be governed by written policies and procedures that are well understood and accessible by those who implement the program as well as those who evaluate its effectiveness. Facilitating access to prepaid funds has the potential to introduce new risks that require specific expertise, staffing levels, and audit and compliance testing.